Saturday, July 30, 2011

Stock Idea: Crompton Greaves

For Q1FY12, despite a 6% YoY rise in net sales at Rs.2438 crore, the company reported a 58% fall in net profit at Rs.79 crore. Cost of raw material rose 35%. Contribution from power sector remained poor in the single digit but more sharp was the fall in the consumer sector, which fell from 35% to 2%. The company has blamed it all on the delays in new orders in the domestic market due to a slowdown in project finalisation by customers.International business activity in Middle East was affected by around 5-10%.
More than the poor performance, the market has probably taken other factors  - former CEO SM Trehan selling his entire holding of 1.8 lakh shares during Jun 29-July 1 at an average price of Rs.260/share. And secondly, investors continue to remain miffed with its buy of an aircraft for Rs.270 crore, which is being viewed as an extravagance. The stock has been witnessing a major sell off and for the discerning long term investor, this may be a good level to accumulate. The first half of FY12 could remain tough but second half could start seeing improvement.
Source: Internet (by S P Tulsian)

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